Thailand

Southeast Asia Real Estate On the Rise

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Recent industry reports have shown that investors in Hong Kong are focusing on real estate in Southeast Asia. Demand for investment properties remains strong in the sector, with transactions climbing 19% each year to approximately $61 billion in the first half of 2017.

“Bangkok’s property prices are just about a quarter of Hong Kong’s,” explains Gordon Cheung, an investor who recently purchased a property in new project Life Asoke Rama 9 in Bangkok. “The location is also great, at the heart of Bangkok’s central business district near the Chinese embassy,” he added.

AP (Thailand) and Mitsubishi Estate Group’s development, which has 154 units for Hong Kong investors, sold more than 95% in its first two days on the market.

According to Vittakarn Chandavimol, AP’s chief condominium officer, “foreign buyers of Thai properties mostly want a stable rental income, unlike those who buy properties in Western countries for their Children’s education. Average rental yield of Bangkok’s property is 5.15 per cent. As only 49 per cent of flats can be sold to foreign buyers, the supply to each market is limited.”

Chandavimol explained the difficulties in breaking in the Chinese market. “Chinese citizens are limited to exporting $50,000 per person, per year. But buyers can split payments, not to mention the fact that a lot of flats are cheaper than that. Prices of high-floor studios on this project start at HK$670,000.”

“Despite capital controls, we expect continued Chinese interest in APAC gateway cities in the near term,” he said. “Thereafter we foresee material Chinese investment in Belt and Road markets in Southeast Asia. This should be a long-term trend.”

Thailand Remains Popular Investment Focus

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World Bank country director Annette Dixon stated that Thailand is still an investment hotspot at a press conference this week.

“Globally and regionally, Thailand remains an attractive investment destination. We won’t expect a lot of business to relocate,” she said, adding that the government should work to support the flood recovery efforts as opposed to populist policies.

The Bank of Thailand has been urged to reduce the policy rate to strengthen the economy in the past. Dixon said that given the high volatility of the world’s economy, Thailand “should be extremely prudent.”

Ekaterina Vostroknutova, a senior economist for East Asia and the Pacific region, explained that developing countries in the sector are currently preoccupied with growth, and have put less focus on inflation, thus ignoring policy rates.

“Central banks in Asia are waiting to see how things unfold,” she said.

PTT Pcl Investment Plans

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The PTT Pcl has big plans. The firm – Thailand’s largest energy firm and third largest oil and gas company according to market value – has plans for investments of $100bn in the next decade.  According to the company’s Chief Executive Prasert Bunsumpun, at the end of this, it is anticipated that annual group revenue will reach $200bn.  The company controls over “30 petroleum, gas exploration, petrochemical and refinery businesses.”

Spending Plans

So, the next question is, how would the money be allocated?  Around 50 percent of it would go towards foreign investment; the remaining half to petroleum exploration and production.  First though, the plans need to get through the board.  So by the end of this month the five-year plan is being put to the board.

According to an article in BusinessWeek, with the plan, the expectation is that the PTT will invest approximately 300bn baht. Over 400bn baht is due to go to PTT Exploration and Production Pcl (PTTEP) and over 200bn baht to the refinery and petrochemical areas in which it works.

Coal Boosts

In addition, as Bansumpun pointed out, the PTT plans to “boost its coal output to 30-40 million tons in 2015 and to 70 million tonnes in 2020 from 10 million tons now.”  It plans to do this once it has acquired Straits Resources Ltd., (Australian coal miner).

Property News: Thailand, China and Hong Kong

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Looking into various parts of Asia, one might not want to seek out a new home there just right now.  Property prices are going through the roof, excuse the pun, and wealthy Thailand is taking advantage.  According to an article in the Bangkok Post, a property developer from Thailand, Pace Development, just recently “launched sales of its luxury Bangkok project MahaNakhon to Hong Kong buyers.”  Records over a mere three days show of “sales worth 350 million baht.”

On the flip side, for those who have something to sell, now is the time.  According to executive director for investment and project marketing of property consultant CB Richard Ellis, Rebecca Shum, now is “the best time to sell property to Hong Kong buyers as prices there were very high.”  The prices for property in Hong Kong are really high these days.  Indeed, they have gone up around 20 percent in the last year and just haven’t come down at all.  Hong Kong and Chinese investors are seeking out properties in other parts.

Hong Kong Prices Peak

Indeed, Hong Kong prices are these days five times more than for the same size in Bangkok.  New units are approximately 1.2m baht per sq m.  Hong Kong and mainland China investors these days therefore seem to prefer “buying property as an investment as the interest rate for deposits was only 2%, which is unattractive to those who refuse to carry cash.”

Bangkok Boom

The truth is, as Shum has noted, “Bangkok is still a top-two destination for lifestyle in the eyes of investors in Hong Kong. Their interest in luxury Thai property is driven by a lift in optimism about the overall political and economic environment in Thailand.”  In addition, the new government has promised to put policies in practice that with “stimulate economic growth immediately.’  This will result in the progression of “major infrastructure projects,” as well as “provide long-term support to economic expansion and be reflected in asset price appreciation, particularly for luxury properties.”

Vietnamese Investment Interests

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Laos, Land of Opportunity?

Just yesterday, a seminar took place on investment possibilities and cooperation at the Laos Vietnamese embassy.  Over two hundred Vietnamese business representatives were in attendance.  Ta Minh Chau, Vietnamese Ambassador, addressed the seminar and pointed out that Laos is a “peaceful country” with huge potential in many areas, especially financial.  Vietnam and Laos have a “special relationship,” with significant support from the Lao Government that has worked hard to establish optimistic and facilitative conditions for the thriving of Vietnamese business investments there.

Indeed, such good relations can be witnessed in the success various Vietnamese businesses are enjoying in Laos, most notably, the Hoang anh-Gia Lai Group, Lao-Viet Bank, Long Thanh Golf, and Song Da Corporation.

In addition, there are many areas in Laos that Vietnamese businesses could be interested in, such as: coffee, rubber, cotton, banking, agriculture and more.  According to a news report the embassy was asked to give Vietnamese  businesses, “information on the legal requirements of both countries to facilitate their investment in Laos.”

It seems that Laos is quite a popular place for foreign investments these days.  According to the Investment Promotion Department of the Ministry Planning and Investment, India is now ranking in the top 10 foreign investors there with more than $359m.  Other countries on the list are: Australia, China, France, Japan, India, Malaysia, Republic of Korea, Singapore, Thailand and Vietnam.  Thailand is definitely the number one investor, ranking in at over $2bn.  The most popular area for investment is the field of electricity.

Thailand Cambodian Trade News

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Border Clashes Negatively Impact Trade

There’s going to be trouble with the Asian economy, and a lot of it. That’s if the situation between Thailand and Cambodia continues. Currently the border clashes there are so detrimental to good sentiments between the two countries, that even though trade is developing, without an end to these clashes, the market share of Thailand goods in Cambodia will be reduced.

According to Kasikorn Research Center (KRC), what will happen is that Thai exporters and potential business investors will lose confidence in placing their businesses in Cambodia. In addition, other countries will start putting pressure on them to take business elsewhere, especially Vietnam.

Good Trading Between Thailand and Cambodia

But it would be a real shame if things went sour. Investment between Thailand and Cambodia has been increasing continuously over the last few years from $1.4bn in 2007 to $2.5bn in 2010. Thailand has been benefitting from this vis-à-vis trade. In addition, trade between the two countries accounts for at least 70 percent of overall trade – that is a huge amount that would be devastating for both places if it things stopped going well.

It’s not all been great news though. In March 2011 there was only a slight increase in export volume. Also, due to border clashes, there was a drop from 34.9 percent in 2008 to 29.9 percent in 2009. There was a large plummet of Thai investment in Cambodia from the 2008 figure of $30.7m to the 2010 figure of $1m.

Vietnam-Cambodia Trade Figures

Consequently there was additional merchandise from Vietnam to the Cambodian market with an increase of 19.5 percent in 2008 to 23.7 percent in 2009. But Vietnamese exports to Cambodia also increased in 2010 by a significant 35.3 percent, culminating in $1.5bn. But anyway Vietnam ranks as Cambodia’s largest investor with “an accumulated investment value of around $49.5m. Thailand comes in second at $47.2m, and Singapore in third place at $24.9m.

So there is work to be done. It would clearly be a huge economic shame if the political situation between Thailand and Cambodia wasn’t resolved – and fast.

Foxy Financial Females?

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Are Asian Women Financially Savvy Today?

Years ago the answer for sure would have been a resounding “no.” But today things are somewhat different. It seems that women in Asia (especially those married, 30+, in the workforce) know their won from their yen and their level of competence is likely to increase further “especially among the younger generation.”

For example, women from Thailand topped financial planning (87) and investment (69.3) scores for financial literacy but Vietnamese women also did pretty well, scoring 70.1 overall, placing them in fourth place. There wasn’t much to sniff at with women from the Philippines either (who did extremely well in Financial Planning), but those from Korea and Japan could probably learn a lesson or two on how to get more financially in-the-know.

Survey Assesses Savvyness

It was the MasterCard Index of Financial Literacy that took a survey of these countries. The questions were posed to 24 markets around APMEA (Asia/Pacific Middle East Africa). It looked at three main areas: Basic Money Management (budgeting, savings and credit responsibility); Financial Planning (their understanding of financial products and services as well as ability to make long-term financial plans); Investment (understanding of risks and products associated with investments). In general, Asian women as a whole did best in Financial Planning.

In developed markets it was women from Australia and New Zealand who were most successful in their financial knowledge. Females from Singapore are pretty good at basic money management but were pretty clueless vis-à-vis anything to do with investments. But when looking at financial literacy, India and China don’t seem to be all that with it.

According to VP of Communications for Asia/Pacific, Middle East and Africa, MasterCard Worldwide, Georgette Tan, “this new MasterCard Index has certainly provided us with fresh insights to women’s aptitude for and knowledge of managing their finances. While it is encouraging to see that women across Asia/Pacific have some degree of financial literacy, it is also apparent that there is still work to be done to improve levels across the board.” This is important as complexities increase in the financial world resulting in a necessity for women to become “more financially confident and competent.” MasterCard also seeks to give more power to these women.

Slowdown In Growth Expected In Thailand

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After the Thai economy’s impressive performance this year, which is forecast to have expanded by between 7 and 7.5 percent, next year is forecast to be much more difficult.

According to many research houses Thailand’s economic growth next year id forecast to be about 4 to 5 percent. This is largely due to a reduction in exports resulting from a debt hangover in Europe and the weakening recovery in America.

The Thailand government hopes that investment and domestic consumption will make up for the export deceleration. It plans budget deficits for the current fiscal year ending in September 2011, and the next fiscal year.